oil and gas

RUSSEL METALS $21.53 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 67.0 million; Market cap: $1.3 billion; Dividend yield: 5.6%) is one of North America’s largest metal distributors. The company serves its roughly 30,000 customers through a network of 50 locations in Canada and 12 in the U.S. In the three months ended June 30, 2011, Russel’s earnings per share rose 26.8%, to $0.52 from $0.41 a year earlier. Revenue rose 22.1%, to $618.6 million from $506.6 million. The company distributed more steel during the quarter, even though flooding in western Canada pushed down demand for pipe for oil drilling. Steel prices weakened, but the company was able to keep its profits high, because it does a good job of controlling its costs....

IAMGOLD CORP., $22.39, symbol IMG on Toronto, owns the Niobec niobium mine in Quebec. Niobium is a rare metal that when used as an additive makes steel stronger, more heat resistant and easier to weld. Niobium is widely used in automobiles and oil and gas pipes. Right now, China accounts for about 25% of worldwide niobium consumption. IAMGold’s Niobec mine produces about 8% of the world’s niobium supply. The company is considering selling a 10% to 20% stake in Niobec, and using the proceeds to fund the mine’s expansion. After that, the company will consider selling more of the mine. IAMGold’s plan for Niobec looks especially attractive this week, after a consortium of five state-owned Chinese companies announced that they are buying 15% of the world’s largest niobium producer for $1.95 billion in cash. Brazil’s Companhia Brasileira de Metalurgia e Mineraçào, or CBMM, produces more than 80% of the world’s niobium supply....

CRITICALCONTROL SOLUTIONS, symbol CCZ on Toronto, sells services and software that help businesses better manage, access and store their information. CriticalControl gets about 60% of its revenue from clients in the oil and gas industry, followed by government (20%), health care (10%) and finance and retail (10%). The company also makes traditional dry flow meters for natural gas wells, and electronic flow measurement devices (EFMs) for shale-gas drilling. In the three months ended June 30, 2011 CriticalControl’s revenue fell 2.0%, to $12.5 million from $12.8 million a year earlier. Revenue at the tech stock’s Service Bureau Operations division rose 11%, while revenue rose 4% at the Canadian Energy Services division....

Core Laboratories N.V. (ADR), $108.31, symbol CLB on New York (Shares outstanding: 48.7 million; Market cap: $5.1 billion; www.corelab.com), is a Netherlands-based firm that provides oil-field services. Core has 70 offices in over 50 countries. The company’s services determine and measure the quantity and quality of fluids, such as crude oil and natural gas, in their wells. That helps oil and gas producers around the world increase their production and better manage their reservoirs. Core also analyzes samples of reservoir rocks for their porosity and permeability. That helps determine the reservoir’s size, and the fluids’ ability to flow through the rock....

All resource stocks are subject to the risk that comes with the rise and fall of commodity prices. But, depending on where they do business, some also face a second challenge: political risk. Among Canadian mining stocks, Sherritt International (Toronto symbol S) is prominently identified with political risk due to its extensive involvement in Cuba. The company’s Cuban operations are profitable, but it is expanding into other countries to lessen that risk. Sherritt is a diversified natural resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 376 megawatts of power-generation capacity in Cuba....

Stantec, Inc., symbol STN on Toronto, sells a range of consulting, project delivery, design/build and technology services. The company’s clients operate in a number of markets, including industry, environment, transportation and construction. Stantec is one of the growth stocks we analyze in Stock Pickers Digest. The company has over 11,000 employees in 170 locations throughout North America. It also has four international offices....

VANGUARD EMERGING MARKETS ETF $43.93 (New York symbol VWO; buy or sell through brokers) aims to track the MSCI Emerging Markets Index, which is made up of common stocks of companies located in emerging markets around the world. The fund has an MER of 0.22%. The fund’s top holdings are Petroleo Brasileiro SA (Brazil: oil and gas), Vale SA (Brazil: mining), Samsung Electronics (South Korea: electronics), Gazprom (Russia: gas utility), China Mobile (China: wireless), Taiwan Semiconductor (Taiwan: computer chips), America Movil SAB de CV (Latin America: wireless), Itau Unibanco Holding SA (Brazil: banking), Industrial & Commercial Bank of China, and CNOOC Ltd. (China: oil and gas). The $65.0-billion Vanguard Emerging Markets ETF’s breakdown by country is as follows: China (17.4%), South Korea (15.2%), Brazil (15.1%), Taiwan (10.9%), South Africa (7.4%), India (7.3%), Russia (7.1%), Mexico (4.4%), Malaysia (3.2%), Indonesia (2.8%), Thailand (1.9%), Poland (1.7%), Chile (1.6%), Turkey (1.3%), Colombia (0.6%), Philippines (0.6%), Peru (0.5%), Czech Republic (0.4%), Hungary (0.4%) and Egypt (0.2%)....

Pennsylvania-based Vanguard Group is one of the world’s largest investment-management companies. The group manages over $1 trillion U.S. in 150 mutual funds. Vanguard, which went into business in 1975, offers low-fee index mutual funds. Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S., because they aren’t registered with provincial securities commissions. For that matter, some Canadian funds aren’t available in all provinces. Canadians can, however, buy Vanguard exchange-traded funds (ETFs) that trade on stock exchanges. We don’t recommend all of Vanguard’s ETFs, but here are two we do see as low-fee buys:...

The long-term outlook is bright for emerging-market economies and companies that operate in them. One of the best ways to tap into that growth is through low-fee exchange-traded funds (ETFs). ISHARES S&P INDIA NIFTY 50 INDEX FUND $25.31 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com), is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities. The fund’s top holdings are Reliance Industries (conglomerate), 7.7%; Infosys Technologies (software), 7.4%; ITC Ltd. (conglomerate), 7.4%; ICICI Bank, 6.7%; Housing Development Finance, 5.9%; Larsen & Toubro Ltd. (conglomerate), 5.7%; HDFC Bank, 5.6%; State Bank of India, 3.4%; Tata Consultancy Services (information technology), 3.3%; and Bharti Airtel (wireless), 3.3%....

PENN WEST PETROLEUM $18.34 (Toronto symbol PWT; Shares outstanding: 466.9 million; Market cap: $8.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.9%) is one of North America’s largest oil and gas producers. The company produces an average of 156,107 barrels of oil equivalent per day (weighted 63% to oil and 37% to natural gas). In the three months ended June 30, 2011, cash flow per share rose 7.1%, to $0.85 from $0.62, mostly due to higher oil and gas prices. The company owns 50% of the huge Cordoba Embayment shale-gas project in B.C. Japan’s Mitsubishi Corp. owns 30%, state-owned Korea Gas Corp. owns 5%, and four other Japanese companies own 3.75% each. Penn West’s partners are spending a total of $850 million to earn their stakes....